Milwaukee’s Future: Not Funding Education One TID at a Time

More on how the downtown streetcar impacts MPS, MATC and the Milwaukee Taxpayer

By Robert Miranda , Editor, Wisconsin Spanish Journal and Chris Johnson, Editor, KINGFISHmke.com

February 18, 2015

Recent reports by local media have once again obfuscated how Milwaukee’s proposal to pay for the streetcar will affect the funding of education and delay any potential property tax relief for Milwaukee taxpayers.

Failing to illustrate Tax Incremental Financing districts (TIF) and Tax Incremental Districts (TID), the media continues to confuse taxpayers on how education funding and any possible property tax relief is impacted by the downtown streetcar.

While we agree that payments of debt incurred by the streetcar will be paid primarily from TIF districts, our contention, and we have remained consistent on this when we first brought this matter forward, is that the funds paid out by the TIF will be funds coming from TIDs that have become “donor” TIDs to the downtown streetcar project.

Last week at a last minute, borderline secretive, Joint Review Board (JRB) meeting, made up of the city’s five taxing entities including the City of Milwaukee, Milwaukee County, MPS, MATC and MMSD, the board approved the financing of the downtown streetcar along with amending the TID (#56 - Erie/Jefferson Riverwalk) to further use property tax revenues to pay for the downtown streetcar.

Since then we have learned that there is yet another TID that was amended back in 2013 TID (#49 - Cathedral Place) to pay for this downtown streetcar.

Since the passing of the streetcar project by the Common Council, we have found that there are two TIDs providing property tax revenues, in the form of “donor” TID’s, to pay for the downtown streetcar to go along with the newly created TID (#82 - Streetcar) for a total of three TIDs.

We do know that the two donor TIDs, which provided property tax revenues to pay the debt incurred to finance other projects, met their debt obligations and could have been terminated. But because the City of Milwaukee moved to amend these TIDs and reclassify them as donor TIDs to the downtown streetcar TID (#82), the revenues from the two donor TIDs will now be tied up to pay streetcar debt instead of going to the taxing entities of the city. In a word, those funds will be deferred away from MPS and MATC.

What public isn’t told

The argument made by downtown streetcar supporters that these deferred property taxes will not increase MPS revenues is technically true as result of the MPS revenue cap imposed by the state. However, what these downtown streetcar supporters intentionally fail to tell the public is that, if these “donor” TIDs were terminated, those property taxes would go to the taxing entities, including MPS, and there would be less need for property taxes from taxpayers to fund MPS. Additional property taxes from terminated TIDs would also go to MATC, which could further reduce the need of property taxes from homeowners.

Continuing to amend TIDs to be donor TIDs shifts the burden of funding MPS from the TIDs to Milwaukee taxpaying homeowners, thus preventing any potential property tax relief.

We are not saying the reports by the local media are inaccurate; we are however, stating that they are incomplete.

THE DOWNTOWN STREETCAR IS DEFERRING MONEY AWAY FROM MPS AND MATC.

Streetcar as economic development tool

In addition, the mayor on a number of occasions, has stated that TIDs support economic development in Milwaukee. To some degree the mayor is correct.

However, a recent study was released exposing the myth of streetcar economic boon.

The new study by the Metropolitan Council entitled, “Streetcar Policy Development: Case Study Report” reveals, among other things, detailed analysis and sobering findings on the contributions streetcars will have in the future economic development plans of the Twin Cities (Minneapolis & St. Paul) Minnesota. http://www.metrocouncil.org/METC/files/20/20532879-d6b9-4dc8-9376-ef08d375441b.pdf

The report talks about nine cities with streetcars, but highlights the streetcar system in the City of Portland, Oregon, as the national model many “urban planners, city officials, and local politicians throughout the United States” look to as the system that makes an impact on economic development of that city.

Many of these leaders see streetcar investments as a “strategy and tool to help revitalize communities, to support new development, and to provide more transportation options to serve the mix of residential, commercial, and retail markets,” according to the report.

The Metropolitan Council report cites a 2008 study prepared by the City of Portland in which the city “estimated $3.5 billion in new investment within two blocks of the City’s starter line,” a widely referenced argument repeated by streetcar supporters around the nation.

And while everyone is mesmerized by the positive projects and outlooks for having a streetcar, the reality of all this pipe dreaming by the urban planners, city officials, and local politicians, according to the Metropolitan Council report, is that “measuring the actual impacts of streetcar investments on the local economy versus other City policies and development incentives is elusive, and debatable.”

Allow us to say that again. The report states that streetcars as a tool for economic development is at best “debatable,” and at worst “elusive.”

Indeed, the Metropolitan Council’s report tells the leaders of the Twin Cities that “there is no universally accepted methodology for estimating the economic benefits of streetcars in isolation from other public and private initiatives aimed at creating vibrant and sustainable urban areas.”

Which begs the question: What methodology for estimating economic benefits that streetcars would bring to Milwaukee did the mayor and his staff use to argue that the Milwaukee streetcar would be a boon for Milwaukee?

Guesswork does not guarantee a sound investment and economic growth.

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Last edited by Tyler Schuster.   Page last modified on February 18, 2015

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